Kiwi Firms Risking It All With Weak Legal Docs

The case of Dreamware, an award-winning juicer company, is a stark warning to the huge number of Kiwi SMEs who—mostly because of affordability challenges—do not have adequate legal protections in place.

Despite securing patents in multiple countries, Dreamware couldn’t afford to do so in Australia. The result? Cheap knockoffs at rock-bottom prices, with seemingly no legal recourse.

"Too many Kiwi businesses also do not have the right legal agreements in place," says Claire Bodle, co-founder of On Your Terms, an online platform that provides customised legal documents for Kiwi businesses. "We see businesses copying someone else’s documents or using AI-generated contracts, which may not fully protect them."

This situation highlights a growing problem for small businesses: legal documentation, intellectual property (IP) protection, and contract management are often overlooked due to cost concerns, yet failing to secure them can lead to significant financial losses. Research suggests poor contract management alone costs companies an average of 9.2% of their annual income.

Three critical areas SMEs must protect

1. Clear terms and conditions with customers 
One of the biggest pitfalls for SMEs is vague service agreements, which lead to "scope creep"—where extra work is done without additional pay. "I see this time and time again," says Bodle. "A designer quotes 20 hours but ends up working 40 but is still only paid for 20."

Disputes become common without clear terms and conditions (T&Cs), and businesses struggle to enforce payments. A proper contract should define service deliverables, payment terms, and what happens in case of disagreements.

2. Intellectual property protection 
The Dreamware case illustrates the importance of protecting IP. Many businesses assume IP protection isn’t important to them, but Bodle warns this is a mistake. "Even if you’re not a tech company, your brand name, designs, and content all hold value. Without protection, you risk losing control over them."

Trademarks, copyright protection, and confidentiality agreements should be secured early. A common issue arises when contractors (rather than employees) develop software or content for a business. If ownership isn’t clearly stated in a contract, the contractor may legally claim the rights to it.

3. Privacy policies & legal compliance 
Every business collects personal data—customer names, emails, and payment details—but many fail to comply with privacy laws. "A short privacy statement at the bottom of an email isn’t enough," says Bodle. "Businesses must explain how they collect, store, and use customer data, and how individuals can access or correct their information."

Failure to comply with privacy laws can result in fines and reputational damage. A proper privacy policy ensures transparency and builds customer trust.

The high cost of poor contract management

Poor legal documentation isn’t just a Kiwi SME issue—it’s a global problem. A World Commerce and Contracting study found that poor contract management costs businesses an average of 9.2% of their annual income, rising to 15% for large capital projects. Additionally, 65% of major projects fail or underperform, with cost overruns averaging 80%.

For SMEs, this means lost revenue, broken business relationships, and missed investment opportunities. Investors want to see proper legal agreements—shareholder agreements, IP ownership, and customer contracts—before committing funds. Without these, businesses risk being undervalued or deemed too risky to invest in.

Making legal protection affordable

Bodle says the legal industry has long been criticised for its complexity and high costs. Traditional lawyers charge by the hour, making legal services unaffordable for many SMEs.

But new technology-driven platforms like On Your Terms are changing this, offering customised legal documents at a fraction of the cost.

Bodle says: "We use technology to make legal services accessible. SMEs can purchase documents online, answer a few questions, and get a contract tailored to their business—all written by experienced NZ lawyers."

The bottom line

The Dreamware case should serve as a wake-up call for Kiwi SMEs. Failing to secure proper legal documentation can result in lost IP, financial setbacks, and missed growth opportunities. Investing in clear contracts, IP protection, and legal compliance isn’t just about risk management but ensuring long-term success.

"Getting your legal foundations right from the start isn’t just about avoiding problems—it’s about giving your business the security and structure it needs to succeed," says Bodle.

Learn more at onyourterms.co.nz

ABOUT ON YOUR TERMS

On Your Terms is a New Zealand-based online platform that provides affordable, customised legal documents for small and medium-sized businesses.

Co-founded by solicitors Claire Bodle, Diana Collie, and Natalie Fennell, the service helps Kiwi SMEs protect their businesses with clear, legally sound agreements—without the high costs of traditional legal services.

Using smart technology, On Your Terms offers easy-to-use legal documents, including customer terms and conditions, privacy policies, shareholders agreements, and employment agreements, all drafted by experienced NZ lawyers.

Businesses can answer a few questions to generate tailored legal documents, ensuring compliance and reducing legal risks.

On Your Terms makes professional legal protection accessible, helping Kiwi businesses safeguard their revenue, intellectual property, and customer relationships.

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